The Panic of 1893 is a panic that resembles the Panic of 1873 in a couple of ways. The first way it resembles the panic of 1873 is the origin of the whole crisis. Reading Railroad was a major rail line in the eastern line and went into receivership. Once this rail line collapsed it started the major downturn of the economy. Many banks and businesses that relied on the rail line were next to fail. This then caused the stock market to crash, followed by all of the European investors pulling their money from the U.S. economy, but eventually it crossed the sea to cause a recession in European nations.[1] Unemployment steadily grew, rising from 1 million in August 1893 to 2 million by January 1894 By the middle of the year, the figure had reached 3 million.[2]
Companies Affected by the Panic of 1893:
Philadelphia and Reading Railroad: Philadelphia and reading railroad was created to build rail lines between its namesake cities. When this company was first chartered in 1833, this rail line mainly carried coal. Soon it expanded into many different types of transpiration like canal and ocean transport. In 1871, company had a net worth of $170 million, and was the largest corporation in the world. This aggressive expansionary policy was the ultimate downfall to the company. Since the US was on a gold standard they could just not print money without the gold to back it up. This did not stop the US Treasury though, President Cleveland was forced to take out a loan. Lucky, President Cleveland was able to get a loan from JPMorgan for $62 million in physical gold. [3]
JPMorgan
JP Morgan
Since the US was on a gold standard they could just not print money without the gold to back it up. This did not stop the US Treasury though, President Cleavland was forced to take out a loan. Lucky, President Cleavland was able to get a loan from JPMorgan for $62 million in physical gold.
The National Cordage Company: The National Cordage Company made rope. Before bankruptsy struck the National Cordage Company on May 5, 1893, the Company has $20 million in assets and $10 million in liabilities. The National Cordage Company's stock had sold for $147 per share, but by May the stock was down to $10 per share on the New York market. These kind of crashes became very common in the Panic of 1893, going from a financial high to an all time low. [4]
Pullman Palace Car Company Stock
Pullman Palace Car Company The Pullman Palace Car Company caused the first national strike in U.S. history. The Pullman Company was located in a town called Pullman, just outside of Chicago. When the Financial Panic of 1893 hit the U.S. the Pullman Palace Car Company was forced to cut wages by 25%, but the Company did not lower the prices of goods or services in the town. Every employee of the Pullman Palace Car Company had to live in Pullman, so other options were not available. As financial conditions kept getting worse, workers become more desperate. "On July 6, rioters set fires that ultimately destroyed 700 rail cars and caused $340,000 in damages to the South Chicago Panhandle yards. On July 7, after being assaulted by rioters, a contingent of guardsmen were forced to fire into a crowd; at least 12 people were killed, and dozens more were wounded." [5]
Men who shaped the Panic of 1893:
President Cleveland:
President Cleavland
He was born in New Jersey in 1837, and raised in New York. When Cleveland was 44, he made his appearance onto the political stage. He was elected to the mayor of Buffalo, New York. Later on in life he was elected Governor of New York. Grover Cleveland was elected president in 1893 for his second term. Cleveland was the first democrat elected president after the Civil War, and he also was the only president to leave for 4 years and then return 4 years later to office. In his second term, he had to deal with a big depression. “He decided to deal with the treasury crisis rather than worry about the business crisis, farm mortgage foreclosures, and unemployment.” When railroad strikers violated an injunction, president Cleveland sent federal troops to enforce it. This action taken against the railroad action stirred a cause in many Americans. Many of his policies during the depression were very unpopular, and his party gave up on him in 1896. [6]
William McKinley
William McKinley: William McKinley was nominated by the Ohio Republican Party in 1891 to take the governor's seat of the state. McKinley's first term in office was very uneventful, but in his second term the Panic of 1893 began. The Governor usually sided with the business owners in Ohio, even calling in the militia at times to put down worker strikes. Perhaps his greatest accomplishment, aside from becoming President of the United States in 1897, was the McKinley Tariff. [7] Many people blame the McKinley Tariff, along with the Sherman Silver Purchase Act for the Panic of 1893. The McKinley Tariff increased tariffs on manufactured goods to as high as 49%. "The Act passed with the understanding that Republicans would support the Sherman Silver Purchase Act; this Act allowed the Treasury to purchase the gold and silver output of mines in exchange for notes redeemable in silver or gold." [8] "The tariff led to inflation and failed to help protect American farmers or industry from foreign competition. In fact, agricultural prices continued to drop while farm equipment prices skyrocketed. Additionally, imports dropped which led to a decrease in tariff payments to the treasury." [9]
Comparison of the Panic's of 1873 and 1893:
The Panic's of 1873 and 1893 stemmed from the same problem. Both panics were caused by over-speculation of the railroad industry. In 1873, private investors poured money into the railroad industry in the form of bonds. This led to an over-expansion of the railroads, with little profits in return. Jay Cooke and Company, one of the leading brokerage firms of the time, went bankrupt due to the failure of railroad companies to repay their outstanding notes. Jay Cooke and Company was specifically highly invested in the Northern Pacific Railroad. When the Northern Pacific Railroad announced it was suspending payments on its outstanding loans Jay Cooke and Company was forced to declare bankruptcy. Bankruptcy spread from one company to the next, and unemployment continued to rise. The Panic of 1893 was also triggered by a railroad going bankrupt. This time it was the Reading Railroad Company. However, the roots of the Panic of 1893 were deeper. In 1890, a Republican-led Congress passed the Silver Purchase Act, and along with it, the McKinley Tariff. The Silver Purchase Act obligated the American government to exchange gold for the newly mined silver. "This Act assigned a value to the silver that was radically greater than what public markets paid. The results were a serious undermining of U.S. gold reserves and skyrocketing inflation."[10] McKinley Tariff made goods in the United States very expensive.[11] Large companies, such as the Reading Railroad Company and the National Cordage Company went bankrupt and triggered the Panic of 1893. European investors began pulling their money out of the United States, depleting the U.S. gold reserves farther. As the demand for money in America increased, monetary policy remained tight. Employment spiked and companies continued to go bankrupt across America. As one can see, the Panic's of 1873 and 1893 were similar; yet the Panics were very different. Some argue that the Panic of 1893 had much more political contributing factors, but nonetheless both panics resulted in a spike in unemployment and wide spread bankruptcies.
"Panic of 1893." United States History. Web. 06 Dec. 2010. .
^ "Panic of 1893." American History and World History at Historycentral.com the Largest and Most Complete History Site on the Web. Web. 06 Dec. 2010. .
"GREAT EPOCHS IN AMERICAN HISTORY." USGenNet. The First and Only Nonprofit Historical-Genealogical Web Hosting Service on the Internet! History, Historical, Family History, Genealogy, Genealogical. Family Values. History and Genealogy. Genealogy and History. ISP. Web. 07 Dec. 2010. .
"William McKinley Jr. - Ohio History Central - A Product of the Ohio Historical Society." Ohio History Central - An Online Encyclopedia of Ohio History - Ohio Historical Society. Web. 07 Dec. 2010. .
Overview:
The Panic of 1893 is a panic that resembles the Panic of 1873 in a couple of ways. The first way it resembles the panic of 1873 is the origin of the whole crisis. Reading Railroad was a major rail line in the eastern line and went into receivership. Once this rail line collapsed it started the major downturn of the economy. Many banks and businesses that relied on the rail line were next to fail. This then caused the stock market to crash, followed by all of the European investors pulling their money from the U.S. economy, but eventually it crossed the sea to cause a recession in European nations.[1] Unemployment steadily grew, rising from 1 million in August 1893 to 2 million by January 1894 By the middle of the year, the figure had reached 3 million.[2]
Companies Affected by the Panic of 1893:
Philadelphia and Reading Railroad:Philadelphia and reading railroad was created to build rail lines between its namesake cities. When this company was first chartered in 1833, this rail line mainly carried coal. Soon it expanded into many different types of transpiration like canal and ocean transport. In 1871, company had a net worth of $170 million, and was the largest corporation in the world. This aggressive expansionary policy was the ultimate downfall to the company. Since the US was on a gold standard they could just not print money without the gold to back it up. This did not stop the US Treasury though, President Cleveland was forced to take out a loan. Lucky, President Cleveland was able to get a loan from JPMorgan for $62 million in physical gold.
[3]
JPMorgan
Since the US was on a gold standard they could just not print money without the gold to back it up.
This did not stop the US Treasury though, President Cleavland was forced to take out a loan.
Lucky, President Cleavland was able to get a loan from JPMorgan for $62 million in physical gold.
The National Cordage Company:
The National Cordage Company made rope. Before bankruptsy struck the National Cordage Company on May 5, 1893,
the Company has $20 million in assets and $10 million in liabilities. The National Cordage Company's stock had
sold for $147 per share, but by May the stock was down to $10 per share on the New York market. These kind of
crashes became very common in the Panic of 1893, going from a financial high to an all time low. [4]
Pullman Palace Car Company
The Pullman Palace Car Company caused the first national strike in U.S. history. The Pullman Company was located in a town called Pullman, just outside of Chicago. When the Financial Panic of 1893 hit the U.S. the Pullman Palace Car Company was forced to cut wages by 25%, but the Company did not lower the prices of goods or services in the town. Every employee of the Pullman Palace Car Company had to live in Pullman, so other options were not available. As financial conditions kept getting worse, workers become more desperate. "On July 6, rioters set fires that ultimately destroyed 700 rail cars and caused $340,000 in damages to the South Chicago Panhandle yards. On July 7, after being assaulted by rioters, a contingent of guardsmen were forced to fire into a crowd; at least 12 people were killed, and dozens more were wounded." [5]
Men who shaped the Panic of 1893:
President Cleveland:
He was born in New Jersey in 1837, and raised in New York. When Cleveland was 44, he made his appearance onto the political stage. He was elected to the mayor of Buffalo, New York. Later on in life he was elected Governor of New York. Grover Cleveland was elected president in 1893 for his second term. Cleveland was the first democrat elected president after the Civil War, and he also was the only president to leave for 4 years and then return 4 years later to office. In his second term, he had to deal with a big depression. “He decided to deal with the treasury crisis rather than worry about the business crisis, farm mortgage foreclosures, and unemployment.” When railroad strikers violated an injunction, president Cleveland sent federal troops to enforce it. This action taken against the railroad action stirred a cause in many Americans. Many of his policies during the depression were very unpopular, and his party gave up on him in 1896. [6]
William McKinley:
William McKinley was nominated by the Ohio Republican Party in 1891 to take the governor's seat of the state.
McKinley's first term in office was very uneventful, but in his second term the Panic of 1893 began. The
Governor usually sided with the business owners in Ohio, even calling in the militia at times to put down worker
strikes. Perhaps his greatest accomplishment, aside from becoming President of the United States in 1897, was
the McKinley Tariff. [7] Many people blame the McKinley Tariff, along with the Sherman Silver Purchase Act for the
Panic of 1893. The McKinley Tariff increased tariffs on manufactured goods to as high as 49%. "The Act passed with the understanding that Republicans would support the Sherman Silver Purchase Act; this Act allowed the Treasury to purchase the gold and silver output of mines in exchange for notes redeemable in silver or gold." [8] "The tariff led to inflation and failed to help protect American farmers or industry from foreign competition. In fact, agricultural prices continued to drop while farm equipment prices skyrocketed. Additionally, imports dropped which led to a decrease in tariff payments to the treasury." [9]
Comparison of the Panic's of 1873 and 1893:
The Panic's of 1873 and 1893 stemmed from the same problem. Both panics were caused by over-speculation of the railroad industry. In 1873, private investors poured money into the railroad industry in the form of bonds. This led to an over-expansion of the railroads, with little profits in return. Jay Cooke and Company, one of the leading brokerage firms of the time, went bankrupt due to the failure of railroad companies to repay their outstanding notes. Jay Cooke and Company was specifically highly invested in the Northern Pacific Railroad. When the Northern Pacific Railroad announced it was suspending payments on its outstanding loans Jay Cooke and Company was forced to declare bankruptcy. Bankruptcy spread from one company to the next, and unemployment continued to rise.
The Panic of 1893 was also triggered by a railroad going bankrupt. This time it was the Reading Railroad Company. However, the roots of the Panic of 1893 were deeper. In 1890, a Republican-led Congress passed the Silver Purchase Act, and along with it, the McKinley Tariff. The Silver Purchase Act obligated the American government to exchange gold for the newly mined silver. "This Act assigned a value to the silver that was radically greater than what public markets paid. The results were a serious undermining of U.S. gold reserves and skyrocketing inflation."[10] McKinley Tariff made goods in the United States very expensive.[11] Large companies, such as the Reading Railroad Company and the National Cordage Company went bankrupt and triggered the Panic of 1893. European investors began pulling their money out of the United States, depleting the U.S. gold reserves farther. As the demand for money in America increased, monetary policy remained tight. Employment spiked and companies continued to go bankrupt across America. As one can see, the Panic's of 1873 and 1893 were similar; yet the Panics were very different. Some argue that the Panic of 1893 had much more political contributing factors, but nonetheless both panics resulted in a spike in unemployment and wide spread bankruptcies.
"Panic of 1893." United States History. Web. 06 Dec. 2010. .
1842,, By. "Reading Railroad: Brief Historical Overview." Reading Railroad Online. Web. 06 Dec. 2010. .
"GREAT EPOCHS IN AMERICAN HISTORY." USGenNet. The First and Only Nonprofit Historical-Genealogical Web Hosting Service on the Internet! History, Historical, Family History, Genealogy, Genealogical. Family Values. History and Genealogy. Genealogy and History. ISP. Web. 07 Dec. 2010. .
Type the content of your reference here.
"Grover Cleveland." The White House. Web. 06 Dec. 2010. .
"William McKinley Jr. - Ohio History Central - A Product of the Ohio Historical Society." Ohio History Central - An Online Encyclopedia of Ohio History - Ohio Historical Society. Web. 07 Dec. 2010. .
"Mckinley Tariff Act." Small Business - Chron.com. Web. 07 Dec. 2010. .